US Charges Bitcoin Exchange Bitzlato With Money Laundering

Authorities have detained the founder of the obscure website and accused it of laundering money linked to illegal Russian financial activity.

According to officials during a news conference in Washington on Wednesday, the U.S. Justice Department and Treasury Department have charged Bitzlato Ltd. with money laundering and detained the company’s creator in Miami.

In order to prevent Bitzlato from providing services to criminals with ties to Russia, the Hong Kong-based platform has been effectively shut down and its founder Anatoly Legkodymov has been brought into U.S. custody, according to Deputy Attorney General Lisa Monaco during the news conference.

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The Federal Bureau of Investigation, French authorities, and the U.S. Treasury Department were all involved in the coordinated enforcement activities, which she described and said destroyed “a busy area of this criminal ecosystem.”

The company has been officially designated as a “primary money-laundering concern” by the Treasury’s Financial Crimes Enforcement Network (FinCEN), one of the most severe sanctions in the government’s arsenal for combating crime because it typically cuts off a company from the international financial system.

The designation effectively labels the exchange as “a worldwide pariah,” according to Wally Adeyemo, deputy secretary of the Treasury.

Legkodymov, a Russian national and the company’s principal owner, once resided in China. He was due to be arraigned on Wednesday in the Southern District of Florida U.S. District Court following his arrest.

According to Justice Department authorities, the unheard-of cryptocurrency exchange hosted the wallets of criminals buying and selling illegal items and provided peer-to-peer services, including $700 million in direct and indirect payments over a number of years.

According to FinCEN, the business handled significant amounts of illegal transactions for Russian ransomware perpetrators, including those with ties to the Russian government.
According to Monaco, the raid on Bitzlato was the most significant U.S. move against a cryptocurrency criminal network to date.

The business, whose servers have been taken over, was also connected to regular transactions with the Russian-based Hydra Market, a darknet market that was the object of an investigation by American officials last year. The “Hydra-Bitzlato crypto-crime axis,” according to Monaco, has been dismantled.